Medicaid costs driven by poverty

Copyright 2013: Houston Chronicle,By Elena Marks

Updated
4:28 pm CDT, Tuesday, May 14, 2013

As Texas lawmakers debate whether to accept billions of federal dollars to insure 1.5 million low-income adults through Medicaid, the conversation inevitably includes concerns about the program's increasing cost.

How did this happen? The answer is actually pretty simple: Medicaid is a program for poor U.S. citizens, and Texas has millions of them.

Over the past decade, the proportion of Texans living in poverty has climbed steadily and steeply, substantially outpacing overall population growth and pushing more and more people onto the Medicaid rolls. If we do not change this trajectory, Medicaid costs will continue to rise precipitously.

Texas Medicaid covers about 3.6 million people, about 15 percent of our population. Participants are primarily poor children, who account for 72 percent of enrollees, and poor elderly, blind and disabled people, who account for 21 percent. The remaining 7 percent are poor pregnant women and parents earning less than $4,000 a year.

Between 2001 and 2009, total Texas Medicaid enrollment grew by 65 percent, from 1.9 million to 3.2 million. The number of enrolled children nearly doubled from 1.2 million to 2.3 million, and the number of elderly, blind and disabled enrollees grew by 36 percent.

Across the country, Medicaid enrollment also grew, but at about half the rate of Texas' total Medicaid growth (33 percent vs. 65 percent) and less than half for children (39 percent vs. 92 percent).

Texas has become an increasingly poor state. Between 2000 and 2010, census data show that the Texas population grew by 4.3 million people - a 21 percent increase.

During that same period, however, the total number of Texans living in poverty grew by 1.4 million - a 45 percent increase, more than double the rate of overall population growth. And the number of children living in poverty grew by 75 percent, nearly quadruple the overall rate of growth.

This large increase in the number of poor people led to a 79 percent increase in Medicaid enrollment from 2000 to 2010.

The increase in enrollment, not the increase in costs per enrollee, is by far the largest driver of rising Medicaid costs. While health care inflation is a major concern for employers and families nationwide, it is not the major factor in Texas' rising Medicaid costs.

The cost per enrollee for Texas Medicaid has risen minimally over the decade, despite rising health care costs outside of the program. The annual cost per enrollee in Texas Medicaid grew by 18 percent from 2002 to 2008, less than the cumulative inflation rate of 19.7 percent and a fraction of the 52 percent rate of growth in per capita national health expenditures. The annual cost per enrollee in Texas in 2009 was $4,884, less than all but 10 states, and 12 percent below the national average.

Lawmakers who are concerned about the rising cost of Medicaid should focus on how to reduce poverty, so fewer people will need Medicaid.

If we strive for a Texas in which everyone can pay for their own insurance, we must adopt strategies to lift people out of poverty so they can participate in the market. Unless and until we reduce the number of Texans living in poverty, that will not happen, and our Medicaid costs will continue to grow.